Even if you’re not sixty-five or over you can hardly help
but know it’s the annual open enrollment period for Medicare just from seeing all
the TV ads sponsored by insurance companies wanting to sell seniors their
health care coverage. So let’s again
cover some Medicare basics.
Medicare is the national insurance plan for the disabled and
people over age sixty-five. It covers
hospital (and other) services under Part A and physician (and other) charges in
Part B. You probably have been paying
premiums for the coverage for years, even if you’re not actually covered by
Medicare yet. That’s because the FICA
tax that comes out of your paycheck includes not only your Social Security
system contribution but also a 1.45% tax on your earnings for hospital insurance. So when you actually enroll in Medicare there
is no further cost for Part A coverage (unless you continue to collect
wages). This is not because you saved
enough in your personal account to pay for it—because there is no personal
account. Benefits are being paid the
accumulated taxes and by the people still working.
You will have to pay premiums for Part B coverage, and that
typically comes directly out of your Social Security benefits. You must enroll for Part B when you become
eligible or else pay a higher penalty rate permanently when you do enroll. There’s an exception for those who have other
qualified health insurance coverage.
During the last Bush administration Medicare added
prescription drug coverage, referred to as Part D. Again, enrolling when you are first eligible
is critical. But you must find a
separate Part D plan to cover your drug needs.
So did Medicare skip over “C”? No, Part C is what you are mostly hearing
touted on TV. Companies like Humana and
United Healthcare offer what are called Part C, or Medicare Advantage,
plans. These are an alternative to
enrolling in “regular” Medicare with the government. They must cover everything regular Medicare
does but almost always offer some additional benefits like vision, hearing, or
dental and even include Part D benefits (drug coverage). They may also advertise that you pay no
premiums for their plan. That’s because
you will continue paying your Part B premiums to Uncle Sam who then pays the
insurance company to assume the financial risk for your health care needs.
Medicare Advantage plans are not the same as Medicare
supplement plans. The latter are
intended to cover the co-pays and deductibles of regular Medicare, which
typically come to 20% or more of a beneficiary’s health care expenses. They do not cover prescription drugs and will
cost the enrollee an additional premium.
In very general terms, then, complete Medicare coverage can
be attained in one of the following ways:
- “Regular” Medicare + a Medicare supplement plan + a Part D prescription drug plan; or
- Medicare Advantage plan
At first glance it looks like a no-brainer: full coverage at
no additional cost above your Part B premium?
Who wouldn’t enroll in a Medicare Advantage plan? But buyer beware. Medicare Advantage plans will have a narrower
network of providers. That means less
choice of doctors and hospitals for you.
Plus, they impose administrative burdens on the healthcare
providers—like having to get pre-authorization before rendering certain types
of care; or putting extra burdens on you, like having to get a referral to go
to a specialist.
For that reason, many providers will not join these
networks. So before signing up for a
Medicare Advantage plan, thoroughly check out its network of doctors and hospitals. Are your doctors in-network? If not, you will probably have to find a new
doctor or else pay mostly out-of-pocket.
And don’t be surprised if the biggest and most highly advertised
insurance companies’ Part C plans are NOT accepted by your doctor/hospital.
In talking to friends, and judging by my own dad’s
experience, Medicare with a supplement and Part D plan will most likely cost
you less out of pocket, all things considered.
So make your choice wisely over the next few weeks if you’re
Medicare-eligible. Don’t take the TV
hype at face value. Check out the
plans. Talk to friends who might be
enrolled in a Part C plan and see what their experience has been. Lots of money is at stake here. The cheapest-premium option might not be the
best option for you, depending on your needs.
As I always say, run the numbers.
Until next time,
Roger
“Good judgment wins
favor.” Proverbs 13:15 NIV®*
*Scripture quotations taken from the Holy Bible, New
International Version® NIV®
Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™Used by permission. All rights reserved worldwide.
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